Stephen Ballesty, Director of Research and Development at RLB said,
‘Global economic activity remains positive in the global investment,
manufacturing and trade, due to falling deflationary pressure and more
optimistic financial markets. The world economy is predicted to grow by
more than 3% from 2017 to 2021, according to the IMF.’

The firm’s construction industry observations are highlighted in the RLB
Market Sector Activity Model, which tracks whether the construction
sectors of
housing,
apartment, office, industrial,
hotel, civil and
retail are in a growth or decline phase.

More than 50 cities in growth zone

‘Over 60% of sectors are in a growth phase across the globe. The
housing, apartment, hotel, and civil sectors have more than 50 cities
within the growth zone and less than 30 cities in the decline zone.
Thirty-one (31) RLB offices around the globe see the apartment sector in
the peak zone. The industrial sector is weakest with only 10 cities in
peak and the commercial sector is in decline,’ Stephen added.

China and India with largest share of construction industry

Growth picked up in the United States, the United Kingdom, Japan and
Euro area countries such as Germany and Spain. Asia-Pacific continues to
account for the largest share of the global construction industry
particularly with China and India. The Middle East and Northern Africa
shows pace is slowing.

The major threat to global growth is the increasing rise of
protectionist trade policies. The risk associated with reduced trade and
cross-border investment flows, mainly in advanced economies, may impact
in slower global growth.

Strong economic growth in Australia and New Zealand

According to the RLB International Report, both Australia and New
Zealand have seen strong economic growth over the past year. This has
mainly been caused by exports, migration inflows, housing stock
deficiency and low interest rates. The relative stability of both
countries has been a positive influence on overseas investment in their
local
property markets.

Australian and New Zealand construction volumes, although still at a
record, have not transposed into significant rises in tender prices.
Most cities are forecasting slightly above inflation results for
construction cost increases, with the exception of the heated markets of
Sydney, Auckland and Wellington, which are all above 4.2% for 2017.

Auckland unable to keep up

The residential construction sector in
Auckland is currently unable to
keep up with net migration which remains exceptionally strong, totalling
over 33,000 in the last year.

The RLB Market Sector Activity Model across Australia showed, of thee
seven sectors RLB monitors, 61 of all city’s sectors are in a growth
phase, with 39% in a decline phase.

Stephen continued, ‘The majority of market sectors within
Sydney and
Melbourne are in the peak phases of the market cycle, whereas
Adelaide
has the most sectors within the growth phase.
Wellington, with six of
seven sectors in the mid-growth phase, is set for a stronger year in
2018.’

Queensland tourism increasing for 2018 Commonwealth Games

Queensland is adjusting from the slowing down of the
mining sector which
has seen more than $60 billion spent. The bright spots in the economy
will come from tourism, education and the coal seam gas sector which has
been spurred into increased activity by the expectation of an east coast
gas crisis emerging later this year.

‘The
ACT Government election result secured the future of the first
stage of the
Light Rail project and there is a strong pipeline of work
in the universities sector.
Northern Territory is experiencing a
prolonged period of low activity.
Gold Coast international visitor
numbers increased by 14% in 2017 with the recently completed $0.5
billion Games Village ready for the 2018 Commonwealth Games,’ he said

Melbourne Metro Rail Tunnel soon to make big impact

Construction activity is still strong in Melbourne with constant new
work coming onto the market. The
Melbourne MetroRail Tunnel is the
biggest public transport project the city hasseen in 35 years and the
impact of construction will be significant. The continued growth in
residential apartments is putting pressure on general pricing with large
spreads being seen in tender pricing. Market talk is focused on future
pressure in the steel and concrete trades due to the commencement of the
metro
tunnel project and other infrastructure projects.

Record construction activity forecast for Sydney in 2018

In Sydney, strong levels of Building Approvals and Building Activity are
providing a buoyant market place for all types of contractors. Due to
Sydney’s strong population growth and infrastructure expenditure, it is
likely construction activity into 2018 will continue to experience
record or near record levels of activity.

Stephen concluded, ‘Concerns have been raised that an oversupply of
Sydney residential multi dwelling units may occur. However,
developer/builders report the financial requirements for such
developments have tightened in recent months.’

Currently for 2018, RLB is forecasting construction cost growth of 3.5%
in Adelaide, 4.0% in Brisbane, 3.0% in Canberra, 2.0% in Darwin, 3.0% in
the Gold Coast, 3.0% in Melbourne, 2.0% in Perth, 4.0% in Sydney and
4.0% in Townsville.